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Inflation Increases Blamed On Tuition Fees

The headline rate of inflation has hit a five-month high, driven up by the trebling of university tuition fees in England and rising food bills.

The Office for National Statistics (ONS) confirmed the Consumer Prices Index (CPI (Berlin: CEJ.BE - news) ) measure rose from an annual rate of 2.2% in September to 2.7% last month.

The figure surprised economists, who had largely predicted a small increase and it makes it more likely that the Bank of England will have to raise its own forecast.

The main driver behind the increase, according to the ONS, was the Government's increase in maximum university tuition fees in England to £9,000 from just over £3,000, which added 0.3% to the CPI rate.

The ONS said education costs jumped 19.1% in total last month - the largest increase since records began.

Higher potato and carrot costs - caused by the soggy summer - and rising second hand car prices also contributed, the body added.

Planned rises in gas and electricity bills , which are starting to take effect, are predicted to drive inflation even higher in the coming months.

Last month's SSE (Xetra: A0RFBG - news) bill increase - which saw tariffs rise by around 9% - were not taken into account for the October figures.

Sky News Economics Editor Ed Conway said the increase means there are some "worrying points for the future".

He added: "We saw inflation start to fall and lots of people were reassured by that because it's been responsible for much of the squeeze on people's incomes.

"If you look beyond those university fees, the fact there are some things in the pipeline - higher utility prices - that may continue to push it up will be of some concern."

The latest figures also showed that the Retail Prices Index (RPI), which includes housing costs, rose to 3.2% in October from 2.6% in September as mortgage rates also increased.

The RPI rise between September and October was the largest monthly increase for two and a half years.

It raises the prospect of rising costs ahead of the crucial Christmas season for retailers - many of which are already launching Christmas sales to attract shoppers in what is expected to be a vicious scrap for business.